CONTINENTAL RESRCES (CLR, Financial) filed Quarterly Report for the period ended 2010-06-30.
Continental Resrces has a market cap of $8.14 billion; its shares were traded at around $47.91 with a P/E ratio of 45.2 and P/S ratio of 13. CLR is in the portfolios of Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund, John Keeley of Keeley Fund Management, Stanley Druckenmiller of Duquesne Capital Management, LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Crude Oil and Natural Gas Sales. Crude oil and natural gas sales for the three months ended June 30, 2010 were $219.4 million, a 50% increase from sales of $146.4 million for the same period in 2009. Our sales volumes increased 423 MBoe, or 13%, over the same period in 2009 due to the continuing success of our enhanced crude oil recovery and drilling programs. Our realized price per Boe increased $14.42 to $57.94 for the three months ended June 30, 2010 from $43.52 for the three months ended June 30, 2009. The differential between NYMEX calendar month average crude oil prices and our realized crude oil price per barrel for the three months ended June 30, 2010 was $9.59 compared to $6.02 for the three months ended June 30, 2009 and $8.29 for the year ended December 31, 2009. Factors contributing to the changing differentials included Canadian crude oil imports and increases in production in the North region, coupled with downstream transportation capacity and seasonal demand fluctuations for gasoline.
During the three months ended June 30, 2010, we realized gains on natural gas derivatives of $6.8 million and realized gains on crude oil derivatives of $6.0 million. During the three months ended June 30, 2010, we reported an unrealized non-cash mark-to-market loss on natural gas derivatives of $10.0 million and an unrealized non-cash mark-to-market gain on crude oil derivatives of $52.7 million. During the three months ended June 30, 2009, our crude oil production was unhedged and we reported non-cash unrealized mark-to-market gains from our gas derivatives of $0.9 million for such period.
Crude Oil and Natural Gas Service Operations. Our crude oil and natural gas service operations consist primarily of the treatment and sale of lower quality crude oil, or reclaimed crude oil. Prices for reclaimed crude oil sold from our central treating units were higher for the three months ended June 30, 2010 than the comparable 2009 period. The price increased $20.70 per barrel which increased reclaimed crude oil income by $1.6 million, contributing to an overall increase in crude oil and natural gas service operations revenue of $0.6 million for the three months ended June 30, 2010. We sold high-pressure air from our Red River units to a third party and recorded revenues of $0.4 million for the three months ended June 30, 2009. Beginning January 2010, we no longer sell high-pressure air to a third party. Associated crude oil and natural gas service operations expenses increased $1.4 million to $4.1 million during the three months ended June 30, 2010 from $2.7 million during the three months ended June 30, 2009 due mainly to an increase in the costs of purchasing and treating crude oil for resale compared to the same period in 2009.
Production Expenses and Production Taxes and Other Expenses. Production expenses decreased 7% to $22.3 million during the three months ended June 30, 2010 from $24.0 million during the three months ended June 30, 2009. Production expense per Boe decreased to $5.90 for the three months ended June 30, 2010 from $7.14 per Boe for the three months ended June 30, 2009. In the prior year we leased compressors from a related party for approximately $400,000 per month under an operating lease and a new agreement was negotiated effective February 1, 2010 for a term of 16 months resulting in the monthly lease fee being reduced to $50,000, lowering production expense per Boe for the 2010 period. Also contributing to the decrease was a non-recurring charge recorded in the prior year period to accrue for potential loss exposure on royalty disputes.
General and Administrative Expenses. General and administrative expenses increased $2.1 million to $11.5 million during the three months ended June 30, 2010 from $9.4 million during the comparable period in 2009. The majority of the increase was in personnel and office expenses. General and administrative expenses include non-cash charges for stock-based compensation of $3.1 million and $2.7 million for the three months ended June 30, 2010 and 2009, respectively. General and administrative expenses excluding stock-based compensation increased $1.7 million for the three months ended June 30, 2010 compared to the same period in 2009. On a volumetric basis, general and administrative expenses increased $0.25 to $3.03 per Boe for the three months ended June 30, 2010 compared to $2.78 per Boe for the three months ended June 30, 2009.
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Continental Resrces has a market cap of $8.14 billion; its shares were traded at around $47.91 with a P/E ratio of 45.2 and P/S ratio of 13. CLR is in the portfolios of Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund, John Keeley of Keeley Fund Management, Stanley Druckenmiller of Duquesne Capital Management, LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
For the first six months of 2010, our crude oil and natural gas production increased to 7,273 MBoe (40,180 Boe per day), up 562 MBoe, or 8%, from the first six months of 2009. The increase in 2010 production was primarily driven by an increase in production from our Bakken field. Our crude oil and natural gas revenues for the first six months of 2010 increased 83% to $436.5 million due to a 62% increase in commodity prices compared to the same period in 2009. Our realized price per Boe increased $22.93 to $59.92 for the six months ended June 30, 2010 compared to the six months ended June 30, 2009. For the six month period ended June 30, 2010, we experienced increases in production taxes and other expenses of $15.8 million, or 86%, compared to the first six months of 2009, due to an increase in commodity prices and an increase in sales volumes. At various times, we have stored crude oil due to pipeline line fill requirements or because of low prices or we have sold crude oil from inventory. These actions result in differences between our produced and sold crude oil volumes. For the six months ended June 30, 2010, crude oil sales volumes were 13 MBbls more than crude oil production, and crude oil sales volumes were 251 MBbls less than crude oil production for the same period in 2009. Our cash flows from operating activities for the six months ended June 30, 2010 were $390.2 million, an increase of $307.7 million from $82.5 million provided by our operating activities during the comparable 2009 period. The increase in operating cash flows was primarily due to increases in revenue as a result of higher commodity prices. During the six months ended June 30, 2010, we invested $526.3 million (including increased accruals of $40.5 million and $1.9 million of seismic costs) in our capital program concentrating mainly in the Bakken field, the Arkoma and Anadarko Woodford plays, and the Red River units.Crude Oil and Natural Gas Sales. Crude oil and natural gas sales for the three months ended June 30, 2010 were $219.4 million, a 50% increase from sales of $146.4 million for the same period in 2009. Our sales volumes increased 423 MBoe, or 13%, over the same period in 2009 due to the continuing success of our enhanced crude oil recovery and drilling programs. Our realized price per Boe increased $14.42 to $57.94 for the three months ended June 30, 2010 from $43.52 for the three months ended June 30, 2009. The differential between NYMEX calendar month average crude oil prices and our realized crude oil price per barrel for the three months ended June 30, 2010 was $9.59 compared to $6.02 for the three months ended June 30, 2009 and $8.29 for the year ended December 31, 2009. Factors contributing to the changing differentials included Canadian crude oil imports and increases in production in the North region, coupled with downstream transportation capacity and seasonal demand fluctuations for gasoline.
During the three months ended June 30, 2010, we realized gains on natural gas derivatives of $6.8 million and realized gains on crude oil derivatives of $6.0 million. During the three months ended June 30, 2010, we reported an unrealized non-cash mark-to-market loss on natural gas derivatives of $10.0 million and an unrealized non-cash mark-to-market gain on crude oil derivatives of $52.7 million. During the three months ended June 30, 2009, our crude oil production was unhedged and we reported non-cash unrealized mark-to-market gains from our gas derivatives of $0.9 million for such period.
Crude Oil and Natural Gas Service Operations. Our crude oil and natural gas service operations consist primarily of the treatment and sale of lower quality crude oil, or reclaimed crude oil. Prices for reclaimed crude oil sold from our central treating units were higher for the three months ended June 30, 2010 than the comparable 2009 period. The price increased $20.70 per barrel which increased reclaimed crude oil income by $1.6 million, contributing to an overall increase in crude oil and natural gas service operations revenue of $0.6 million for the three months ended June 30, 2010. We sold high-pressure air from our Red River units to a third party and recorded revenues of $0.4 million for the three months ended June 30, 2009. Beginning January 2010, we no longer sell high-pressure air to a third party. Associated crude oil and natural gas service operations expenses increased $1.4 million to $4.1 million during the three months ended June 30, 2010 from $2.7 million during the three months ended June 30, 2009 due mainly to an increase in the costs of purchasing and treating crude oil for resale compared to the same period in 2009.
Production Expenses and Production Taxes and Other Expenses. Production expenses decreased 7% to $22.3 million during the three months ended June 30, 2010 from $24.0 million during the three months ended June 30, 2009. Production expense per Boe decreased to $5.90 for the three months ended June 30, 2010 from $7.14 per Boe for the three months ended June 30, 2009. In the prior year we leased compressors from a related party for approximately $400,000 per month under an operating lease and a new agreement was negotiated effective February 1, 2010 for a term of 16 months resulting in the monthly lease fee being reduced to $50,000, lowering production expense per Boe for the 2010 period. Also contributing to the decrease was a non-recurring charge recorded in the prior year period to accrue for potential loss exposure on royalty disputes.
General and Administrative Expenses. General and administrative expenses increased $2.1 million to $11.5 million during the three months ended June 30, 2010 from $9.4 million during the comparable period in 2009. The majority of the increase was in personnel and office expenses. General and administrative expenses include non-cash charges for stock-based compensation of $3.1 million and $2.7 million for the three months ended June 30, 2010 and 2009, respectively. General and administrative expenses excluding stock-based compensation increased $1.7 million for the three months ended June 30, 2010 compared to the same period in 2009. On a volumetric basis, general and administrative expenses increased $0.25 to $3.03 per Boe for the three months ended June 30, 2010 compared to $2.78 per Boe for the three months ended June 30, 2009.
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